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June 7 — The American Civil Liberties Union in a new lawsuit is accusing Dignity Health—the
fifth largest hospital system in the nation—of discriminating against transgender
employees by denying them coverage for gender reassignment treatment (
Robinson v. Dignity Health
, N.D. Cal., No. 3:16-cv-03035, complaint filed
6/6/16
).

The lawsuit was filed June 6 in the U.S. District Court for the Northern District
of California. According to the complaint, Dignity Hospital, through its self-funded
health-care plan, singled out transgender employees for unequal treatment by categorically
depriving them of medical care for gender reassignment treatment. The ACLU says this
violates Title VII of the Civil Rights Act of 1964 and Section 1557 of the Affordable Care Act.

Josef Robinson, a transgender nurse who works at Dignity Health's Chandler Regional
Medical Center in Arizona, was allegedly denied coverage for his double-mastectomy
surgery based on an exclusion of “sex transformation”
treatment in Dignity Health's plan. Robinson ended up paying $7,450 out of pocket
for his surgery and was denied coverage for further treatment.

First Lawsuit Under Nondiscrimination Rule

The lawsuit comes almost a month after the Department of Health and Human Services
issued a final rule implementing nondiscrimination provisions of the ACA (
94 PBD, 5/16/16
). The rule prohibits discrimination on the basis of sex in federally funded health
programs.

“As far as I know this is the first lawsuit filed after the final rule was released
last month,” Josh Block, senior staff attorney of the ACLU's LGBT and HIV Project
told Bloomberg BNA June 7.

Asked as to whether the nondiscrimination rule makes any difference in Robinson's
case, Block answered no. The rule strengthens Robinson's claim but this is what the
ACA requires even if no rule had been issued, Block said. “The final rule should remove
any doubt that Dignity Health is violating the law,” Block said.

This lawsuit is different from a case decided last month where a woman sought coverage
for her teenage son's gender reassignment surgery, Block said. In
, a federal judge in Minnesota barred Brittany Tovar from asserting federal and state
discrimination claims against her employer, explaining that Tovar wasn't the one personally
injured by the exclusion for gender reassignment benefits in her employer's health
plan (
93 PBD, 5/13/16
).

There is a “big difference” between both cases, Block said. In this new lawsuit, the
employer, Dignity Health, as a health-care provider is expressly prohibited from violating
ACA provisions, Block said.

Plan's Exclusionary Clause

Dignity Health provides medical coverage to its employees through a self-funded plan
administered by United Medical Resources, a subsidiary of United Healthcare, the complaint
says. According to Robinson, United denied coverage based on Dignity Health's exclusionary
clause.

The Equal Employment Opportunity Commission issued a determination finding reasonable
cause to believe that the plan discriminated against Robinson on the basis of sex
by excluding all gender reassignment treatments from health-care coverage, the complaint
alleges.

In answering inquiries about its policy to exclude gender transition treatment, Dignity
Health said that according to the “organization values” the policies didn't discriminate
against employees, the complaint says.

Moreover, the complaint alleges that Dignity Health said to the EEOC that the exclusion
wasn't discriminatory because health benefits under the plan weren't provided for
"any personality disorders, including sexual/gender identity disorders and behavior
and impulse control disorders."

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